CHINA STAR FOOD GROUP LIMITED (formerly known as Brooke Asia Limited)
(Incorporated in the Republic of Singapore)
(Company Registration No. 200718683N)
Unaudited Financial Statements and Dividend Announcement
For the Three Months Ended 31 December 2015
This announcement has been prepared by the Company and its contents have been reviewed by the
Company’s sponsor, PrimePartners Corporate Finance Pte. Ltd. (“Sponsor”) for compliance with the
Singapore Exchange Securities Trading Limited (“SGX-ST”) Listing Manual Section B: Rules of Catalist. The
Sponsor has not verified the contents of this announcement.
This announcement has not been examined or approved by the SGX-ST. The Sponsor and the SGX-ST assume
no responsibility for the contents of this announcement, including the accuracy, completeness or correctness
of any of the information, statements or opinions made or reports contained in this announcement.
The contact person for the Sponsor is Mr Lance Tan, Director, Continuing Sponsorship, at 16 Collyer Quay,
#10-00 Income at Raffles, Singapore 049318, telephone (65) 6229 8088.
Background
China Star Food Group Limited (the “Company” and together with its subsidiaries, the “Group”), formerly
known as Brooke Asia Limited, was formed through a reverse takeover (“RTO”) of 100% equity interest in
China Star Food Holdings Pte. Ltd. (“CSFH” and together with its subsidiaries, the “CSFH Group”) which
primarily engaged in the production and sales of sweet potato snack food products in the People’s Republic
of China. The RTO was completed on 22 September 2015 and the Company was renamed China Star Food
Group Limited on the same day. Please refer to the Company’s circular dated 26 June 2015 for further
details of the RTO.
Following the completion of the RTO, the presentation currency of the Company’s financial statements was
changed from Singapore Dollars (“SGD”) to Chinese Renminbi (“RMB”). The exchange rates of SGD1.00 to
RMB4.5235 (as at 30 June 2015) and SGD1.00 to RMB4.5265 (as at 22 September 2015) were used for the
conversion of the balances denominated in SGD.
The financial year end of CSFH is 31 March. Pursuant to the completion of the RTO, the financial year end of
the Company has been changed from 30 June to 31 March to align with the same financial year end of
CSFH.
1
BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS
At Group Level
The acquisition of CSFH has been accounted as a RTO in accordance with Financial Reporting Standard 103
Business Combinations (“FRS 103”). Under FRS 103, the legal subsidiary, CSFH, is regarded as the
accounting acquirer and the Company as the accounting acquiree, for accounting purposes. As such, the
consolidated financial statements have been prepared and presented as a continuation of the CSFH Group.
The above accounting treatment is only applied to the consolidated financial statements of the Group. At
the Company level, the investment in CSFH is accounted for as an investment in a subsidiary.
Accordingly, the consolidated statement of profit or loss and other comprehensive income, consolidated
statement of financial position, consolidated statement of changes in equity and consolidated statement of
cash flows for the three months and nine months ended 31 December 2015 have been presented as a
continuation of the CSFH Group’s financial results and operations.
Since such consolidated financial statements represent a continuation of the CSFH Group:
(a) the assets and liabilities of the CSFH Group are recognised and measured in the consolidated
(b)
(c)
(d)
(e)
statement of financial position at their pre-combination carrying amounts;
the assets and liabilities of the Company, the accounting acquiree, are recognised and measured in
accordance with FRS 103;
the retained earnings and other equity balances recognised in the consolidated financial statements
are the retained earnings and other equity balances of the CSFH Group immediately before the
business combination;
the amount recognised as issued equity interest in the consolidated financial statements is determined
by adding to the issued equity of the CSFH Group immediately before the business combination to the
fair value of the Company determined based on the share price of the Company at the acquisition
date. However, the equity structure appearing in the consolidated financial statements (i.e. the
number and type of equity instruments issued) shall reflect the equity structure of the legal parent (i.e.
the Company), including the equity instruments issued by the legal parent (i.e. the Company) to effect
the combination; and
the comparative figures presented in these consolidated financial statements are that of consolidated
financial statements of the CSFH Group.
Consolidated financial statements prepared following the RTO shall reflect the fair values of the assets and
liabilities of the legal parent (i.e. the accounting acquiree for accounting purposes). Therefore, the cost of
the business combination for the acquisition is allocated to the identifiable assets and liabilities of the legal
parent (i.e. the Company) that satisfy the recognition criteria at their fair values as at 22 September 2015.
The excess of the cost of the RTO over the net fair value of the identifiable assets and liabilities is
recognised as goodwill on the consolidated statement of financial position.
At Company Level
Reverse acquisition accounting applies only to the consolidated financial statements at the Group level.
Therefore, in the Company’s separate financial statements, the investment in the legal subsidiaries (CSFH
Group) is accounted for at cost less accumulated impairment losses, if any.
2
Notes:
(i)
The Group’s consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated
statement of changes in equity for the nine months ended 31 December 2015 (“9M2016”) refer to the enlarged group which
included the results of the CSFH Group from 1 April 2015 to 31 December 2015 and the results of China Star Food Group
Limited (formerly known as Brooke Asia Limited) for the period from 23 September 2015 to 31 December 2015.
(ii)
The Group’s consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated
statement of changes in equity for the nine months ended 31 December 2014 (“9M2015”) refer to the results of the CSFH
Group from 1 April 2014 to 31 December 2014.
(iii)
The Group’s consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated
statement of changes in equity for the three months ended 31 December 2015 (“3Q2016”) refer to the enlarged group which
included the results of the CSFH Group from 1 October 2015 to 31 December 2015 and the results of China Star Food Group
Limited (formerly known as Brooke Asia Limited) for the period from 1 October 2015 to 31 December 2015.
(iv)
The Group’s consolidated statement of comprehensive income, consolidated statement of cash flows and consolidated
statement of changes in equity for the three months ended 31 December 2014 (“3Q2015”) refer to the results of the CSFH
Group from 1 October 2014 to 31 December 2014.
(v)
The Group’s consolidated statement of financial position as at 31 December 2015 refers to the enlarged group which consists
of the assets and liabilities of the CSFH Group and China Star Food Group Limited (formerly known as Brooke Asia Limited) as
at 31 December 2015.
(vi)
The Group’s consolidated statement of financial position as at 31 December 2014 refers to the consolidated statement of
financial position of the CSFH Group.
(vii) The Company’s statement of financial position as at 31 December 2015 and the statement of changes in equity for the
3Q2016 refer to that of China Star Food Group Limited (formerly known as Brooke Asia Limited).
3
PART I - INFORMATION REQUIRED FOR ANNOUNCEMENTS OF QUARTERLY (Q1, Q2 & Q3) AND FULL
YEAR RESULTS
1(a)(i)
An income statement and statement of comprehensive income, or a statement of
comprehensive income (for the group) together with a comparative statement for the
corresponding period of the immediately preceding financial year
Revenue
Cost of sales
Gross profit
Other items of income
Interest income
Other income
Other items of expense
Marketing and distribution costs
Administrative expenses
Finance costs
Other operating expenses
Profit from operation
Non-operating expenses
Profit before income tax
Income tax expense
Profit /(loss) for the period, net of tax
Other comprehensive income
Items that will or may be reclassified
subsequently to profit or loss
Foreign currency translation differences, net of
tax
Total comprehensive income/(loss) for the
period
Group
Group
Nine
Months
Ended
Three Months Ended
31
31
31
31
December
December
December December
2015
2014
2015
2014
(Unaudited) (Unaudited) Change (Unaudited) (Unaudited) Change
RMB’000
RMB’000
%
RMB’000
RMB’000
%
131,438
111,528
17.9
352,537
286,788
22.9
(73,277)
(60,953)
20.2
(195,985)
(170,926)
14.7
156,552
35.1
58,161
50,575
15.0
115,862
1,141
-
75
-
n.m.
-
3,384
246
192
-
n.m.
n.m.
(17,401)
(19,436)
(230)
22,235
22,235
(5,320)
16,915
(9,286)
(2,776)
(205)
(3)
38,380
38,380
(8,615)
29,765
87.4
600.1
12.2
n.m.
(42.1)
(42.1)
(38.2)
(43.2)
(38,707)
(30,981)
(808)
(4,928)
84,758
(70,554)
14,204
(23,336)
(9,132)
(22,966)
(6,562)
(428)
(45)
86,053
86,053
(20,732)
65,321
68.5
372.1
88.8
n.m.
(1.5)
n.m.
(83.5)
12.6
n.m.
(112)
384
n.m.
317
697
(54.5)
16,803
30,149
(44.3)
(8,815)
66,018
n.m.
n.m. – not meaningful
4
1(a)(ii) Notes to Consolidated Statement of Comprehensive Income
Group
Group
Profit/ (Loss) for the financial period
Three Months Ended
Nine Months Ended
is stated after charging/(crediting)
31
31
31
31
the following:
December 2015 December 2014 December 2015 December 2014
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
RMB’000
RMB’000
RMB’000
RMB’000
Amortisation of intangible assets
Amortisation of leased farmland
Depreciation of property, plant and
equipment
Foreign exchange loss/(gain), net
Interest expense
Interest income
Loss on transfer of leased farmland
Property, plant and equipment
written off
Non-operating expenses
Goodwill written-off
RTO expenses
664
-
44
600
1,993
-
132
1,800
1,329
30
230
(1,141)
-
507
(175)
205
(75)
-
2,755
(96)
808
(3,384)
1,713
1,311
428
(192)
-
-
1
2,814
43
-
-
36,660
33,894
-
5
1(b)(i) A statement of financial position (for the issuer and group), together with a comparative
statement as at the end of the immediately preceding financial year
Group
31 December 2015 31 March 2015
(Unaudited)
(Unaudited)
RMB’000
RMB’000
Company
31 December 2015 30 June 2015
(Unaudited)
(Unaudited)
RMB’000
RMB’000
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Other receivables, non-current
Other assets, non-current
Investment in subsidiaries
Total non-current assets
93,280
18,914
18,360
27,987
158,541
81,166
9,093
64,500
154,759
770,868
770,868
611
611
Current assets
Inventories
Trade and other receivables
Other assets, current
Cash and cash equivalents
Total current assets
8,843
19,409
10,039
170,712
209,003
5,514
11,160
10,169
121,209
148,052
1
1
1,303
19,917
21,220
Total assets
367,544
302,811
770,869
21,831
88,109
5
787,533
28,834
177,163
26,444
291,716
200,983
11,439
212,427
(35,097)
10,349
762,785
(10,006)
(19)
18,809
Non-current liability
Deferred tax liability
Total non-current liability
1,246
1,246
-
-
-
Current liabilities
Income tax payable
Trade and other payables
Other financial liabilities
Other liabilities
Total current liabilities
Total liabilities
5,103
50,844
13,000
5,635
74,582
75,828
10,584
49,764
27,276
2,760
90,384
90,384
8,084
8,084
8,084
3,022
3,022
3,022
Total equity and liabilities
367,544
302,811
770,869
21,831
EQUITY AND LIABILITIES
Equity
Share capital
Retained earnings / (accumulated
losses)
Other reserves
Total equity
6
1(b)(ii) Aggregate amount of group’s borrowings and debt securities
Amount repayable in one year or less, or on demand
As at 31 December 2015
(Unaudited)
Secured
Unsecured
RMB’000
RMB’000
10,000
3,000
As at 31 March 2015*
(Unaudited)
Secured
Unsecured
RMB’000
RMB’000
10,000
3,000
*Excludes loans from director amounting to RMB14,276,000.
Amount repayable after one year
As at 31 December 2015
(Unaudited)
Secured
Unsecured
RMB’000
RMB’000
-
As at 31 March 2015
(Unaudited)
Secured
Unsecured
RMB’000
RMB’000
-
Details of any collateral
The bank loan of RMB10,000,000 is secured by mortgages of a leasehold building and land use rights of the Group,
and guaranteed by one of the Company’s directors.
7
1(c) A statement of cash flows (for the group), together with a comparative statement for the
corresponding period of the immediately preceding financial year
Consolidated Statement of Cash Flows
Group
Three months Ended
31 December
31 December
2015
2014
(Unaudited)
(Unaudited)
RMB´000
RMB´000
Cash flows from operating activities
Profit before income tax
Interest income
Interest expense
Depreciation of property, plant and equipment
Property, plant and equipment written-off
Amortisation of intangible assets
Amortisation of leased farmland
Loss on transfer of leased farmland
Goodwill written-off
RTO professional fees paid in shares
Exchange differences on translating functional
to presentation currency
Operating cash flows before changes in
working capital
Inventories
Group
Nine months Ended
31 December
31 December
2015
2014
(Unaudited)
(Unaudited)
RMB´000
RMB´000
22,235
(1,141)
230
1,329
664
-
38,380
(75)
205
507
1
44
600
-
14,204
(3,384)
808
2,755
2,814
1,993
1,713
36,660
28,064
86,053
(192)
428
1,311
43
132
1,800
-
(111)
584
345
697
23,206
(2,408)
40,246
231
85,972
(3,329)
Trade and other receivables
Other assets
Trade and other payables
Other liabilities
(3,977)
(8,162)
12,570
(4,468)
(5,119)
(7,654)
13,102
(14,091)
(7,017)
2,659
16,144
2,876
90,272
24,811
4,943
Net cash flows from operations
Income taxes paid
16,761
(7,232)
26,715
(6,114)
97,305
(27,571)
(7,140)
7,548
2,407
122,841
(25,537)
9,529
20,601
69,734
97,304
(1,863)
1,141
(18,340)
(9,450)
75
(17,683)
(119)
1
(15,064)
3,384
(61,353)
(9,450)
192
(722)
(27,715)
(29,481)
(70,611)
-
10,000
8,927
3,000
13,000
(230)
-
(2,150)
3,936
80
(88)
(205)
-
(3,000)
1,131
(808)
-
(5,150)
9,282
168
(88)
(428)
(15,000)
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Advance payment for land use rights
Acquisition of intangible assets
Cash inflow from RTO
Repayment of loan from directors
Interest income received
Net cash flows used in investing activities
Cash flows from financing activities
Proceed of convertible loan
Proceed of new bank loan
Repayment of bank loan
Proceeds of loan from directors
Advances from a related party
Repayment of advances from a related party
Interest expense paid
Adjustment pursuant to restructuring exercise
8
Net cash flows (used in)/from financing
activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of
financial period
Cash and cash equivalents at end of the
financial period
(230)
8,577
11,573
4,459
9,250
49,503
1,784
28,477
162,135
88,197
121,209
64,179
170,712
92,656
170,712
92,656
9
1(d)(i) A statement (for the issuer and group) showing either (i) all changes in equity or (ii) changes in
equity other than those arising from capitalisation issues and distributions to shareholders, together with
a comparative statement for the corresponding period of the immediately preceding financial year
Statement of Changes in Equity
Group
Balance at 1 October 2015
Total comprehensive income
Transfer to other reserves
Balance as at 31 December 2015
Share
capital
(Unaudited)
RMB’000
88,109
88,109
Other
reserves
(Unaudited)
RMB’000
11,868
(112)
14,688
26,444
Retained
earnings
(Unaudited)
RMB’000
174,936
16,915
(14,688)
177,163
Total
equity
(Unaudited)
RMB’000
274,913
16,803
291,716
Balance at 1 October 2014
Total comprehensive income
Transfer from other reserves
Balance as at 31 December 2014
5
5
10,949
384
(522)
10,811
142,588
29,765
522
172,875
153,542
30,149
183,691
Share
capital
(Unaudited)
RMB’000
787,533
787,533
Other
reserves
(Unaudited)
RMB’000
(12,405)
22,754
10,349
Accumulated
losses
(Unaudited)
RMB’000
(34,186)
(911)
(35,097)
Total
equity
(Unaudited)
RMB’000
740,942
21,843
762,785
28,834
28,834
(3,402)
(3,402)
(1,515)
(2,832)
(4,347)
23,917
(2,832)
21,085
Company
Balance as at 1 October 2015
Total comprehensive income/(loss)
Balance as at 31 December 2015
Balance as at 1 October 2014
Total comprehensive loss
Balance as at 31 December 2014
10
1(d)(ii) Details of any changes in the company’s share capital arising from rights issue, bonus issue, share
buy-backs, exercise of share options or warrants, conversion of other issues of equity securities,
issue of shares for cash or as consideration for acquisition or for any other purpose since the end
of the previous period reported on. State also the number of shares that may be issued on
conversion of all the outstanding convertibles, as well as the number of shares held as treasury
shares, if any, against the total number of issued shares excluding treasury shares of the issuer,
as at the end of the current financial period reported on and as at the end of the corresponding
period of the immediately preceding financial year.
Shares Capital – Ordinary Shares
Number of issued
Issued and paid-up
shares share capital (RMB’000)
Balance as at 1 October 2015
Adjustment of shares pursuant to Share
Consolidation
Balance as at 31 December 2015
924,636,000
787,533
(693,477,000)
-
231,159,000
787,533
On 22 December 2015, the Company completed a share consolidation exercise to consolidate every
4 ordinary shares in the capital of the Company into 1 consolidated share (“Share Consolidation”).
The issued share capital of the Company now comprises 231,159,000 consolidated shares after the
Share Consolidation.
Save for the above, there were no changes in the issued share capital of the Company since 30
September 2015.
The Company did not have any outstanding options, convertibles or treasury shares as at 31
December 2015 and 30 June 2015.
1(d)(iii) To show the total number of issued shares excluding treasury shares as at the end of the current
financial period and as at the end of the immediately preceding year
Total number of issued shares
* Prior to RTO
As at 31 December 2015
231,159,000
As at 30 June 2015
53,636,000*
The Company did not have any treasury shares as at 31 December 2015 and 30 June 2015.
1(d)(iv) A statement showing all sales, transfers, disposals, cancellation and/or use of treasury shares as
at the end of the current financial period reported on.
Not applicable. The Company did not have any treasury shares during and as at the end of the
current financial period reported on.
11
2.
Whether the figures have been audited or reviewed, and in accordance with which auditing
standard or practice
The figures have not been audited or reviewed by the Company’s auditors.
3.
Where the figures have been audited or reviewed, the auditors’ report (including any
qualifications or emphasis of a matter)
Not applicable. The figures have not been audited or reviewed by the Company’s auditors.
4.
Whether the same accounting policies and methods of computation as in the issuer’s most
recently audited annual financial statements have been applied
Except as disclosed in paragraph 5 below, the accounting policies and methods of computation
adopted in the financial statements for the current reporting period are consistent with those
disclosed in the most recently audited combined financial statements of the CSFH Group for the
financial year ended 31 March 2014 as set out in the Company’s circular dated 26 June 2015.
5.
If there are any changes in the accounting policies and methods of computation, including any
required by an accounting standard, what has changed, as well as the reasons for, and the
effect of, the change
The Group has adopted all the applicable new and revised Financial Reporting Standards (“FRS”)
and Interpretation of FRS (“INT FRS”) that are relevant to its operation and effective for the
accounting periods beginning on or after 1 April 2015. The adoption of these new and revised FRS
did not result in any substantial change to the Group’s and the Company’s accounting policies and
has no significant impact on the financial statements for the current financial reporting period.
12
6.
Earnings per ordinary share of the group for the current period reported on and the
corresponding period of the immediately preceding financial year, after deducting any provision
for preference dividends
Group
Three Months Ended
Earnings/(Loss) per share
(“EPS” or “LPS”)
Nine Months Ended
31 December 31 December 31 December 31 December
2015
2014
2015
2014
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
Profit/(Loss) for the period (RMB’000)
16,915
29,765
(9,132)
65,321
Weighted average number of ordinary
shares in issue(1)
217,722,263
210,000,000
217,722,263
210,000,000
Basic EPS/(LPS) (RMB cents)
7.77
14.17
(4.19)
31.11
Fully diluted EPS/(LPS)(2) (RMB cents)
7.77
14.17
(4.19)
31.11
Note:
(1) The weighted average number of ordinary shares used for the calculation of earnings/loss per share
has been adjusted for Share Consolidation.
(2) The basic and fully diluted LPS/EPS were the same as there were no potentially dilutive ordinary shares
in issue as at 31 December 2015 and 31 December 2014.
The table below shows the EPS after adjusting for non-recurring one-off items pertaining to the
RTO:Group
Profit /(Loss) for the period (RMB’000)
Three Months Ended 31
December 2015
(Unaudited)
16,915
Nine Months Ended
31 December 2015
(Unaudited)
(9,132)
Adjusting for non-recurring items:
-
Goodwill written off (RM’000)
-
36,660
-
RTO expenses (RMB’000)
-
33,894
16,915
61,422
7.77
28.21
7.77
28.21
Profit for the period after adjusting for nonrecurring items (RMB’000)
(1)
Basic EPS (RMB cents)
Fully diluted EPS
(1)(2)
(RMB cents)
13
7.
Net asset value (for the issuer and group) per ordinary share based on the total number of
issued shares excluding treasury shares of the issuer at the end of the
(a) Current period reported on; and
(b) Immediately preceding financial year
Group
Net asset value (“NAV”)
NAV per ordinary share (RMB
cents)
Number of ordinary shares in
issue(1)
Company
31 December
2015
31 March
2015
31 December
2015
30 June
2015
(Unaudited)
(Unaudited)
(Unaudited)
(Unaudited)
126.20
91.90
329.98
140.27
231,159,000 231,159,000(2)
231,159,000
13,409,000
Note:
(1)
(2)
The number of ordinary shares used for the calculation of net asset value per share has been
adjusted for Share Consolidation.
For comparable purpose, the NAV per share of the Group as at 31 March 2015 is computed based on
total number of ordinary shares in issue at the date on the completion of the RTO.
14
8.
A review of the performance of the group, to the extent necessary for a reasonable
understanding of the group’s business. The review must discuss:(a) any significant factors that affected the turnover, costs, and earnings of the group for the
current financial period reported on, including (where applicable) seasonal or cyclical
factors; and
(b) any material factors that affected the cash flow, working capital, assets or liabilities of the
group during the current financial period reported on
Review for the performance of the Group for the three months ended 31 December 2015
(“3Q2016”) as compared to the three months ended 31 December 2014 (“3Q2015”).
Consolidated Statement of Comprehensive Income
Revenue
The detailed breakdown of revenue of the Group by product categories was as follows:
Revenue by product category
Preserved foods
3Q2016
(RMB’000)
11,632
3Q2015
(RMB’000)
14,543
% change
(20.0)
Crisps
10,945
10,132
8.0
Candies
45,574
29,273
55.7
Baked goods
35,206
25,425
38.5
Pastries
17,503
19,134
(8.5)
Roasted sweet potato nuts
10,578
13,021
(18.8)
131,438
111,528
17.9
Total revenue
The increase in revenue of approximately RMB19.9 million or 17.9% was mainly attributable to the
increase in sales from crisps, candies and baked goods, partially offset by a decrease in sales from
preserved foods, pastries and roasted sweet potato nuts as a result of new products launches and
revamped product packaging on certain product categories. The overall increase in revenue was
also attributable to more advertising and sales promotional events in 3Q2016.
Gross profit
Gross profit increased by approximately RMB7.6 million or 15.0%. This was in line with the increase
in revenue.
Despite the increase in gross profit, the overall gross profit margin declined slightly from 45.3% to
44.2%. This was mainly due to the payment of incentive bonus of RMB1.7 million to the production
workers.
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Other items of income
Interest income
Interest income increased by approximately RMB1.1 million due mainly to recognition of interest
income of RMB1.1 million from the unwinding of the finance income arising from the discounted
five annual repayments relating to the transfer of leased farmland arrangement. Please refer to the
Company’s circular to shareholders dated 26 June 2015 for further details of the transfer of leased
farmland arrangement.
Other items of expense
Marketing and distribution costs
Marketing and distribution costs increased by RMB8.1 million or 87.4%. This was primarily due to
increase in advertisement costs (RMB1.2 million), delivery charges (RMB0.6 million), sales
personnel salaries and bonuses (RMB2.8 million), publicity expenses (RMB1.6 million) and sales
promotional expenses (RMB1.5 million), which was in line with the Group’s marketing strategy to
create brand awareness and expand sales channels.
Administrative expenses
Administrative expenses increased by RMB16.6 million or 600.1%. This was mainly due to increase
in research and development costs for new products to aid future sales (RMB13.0 million),
amortisation of intangible assets (RMB0.6 million), administrative staff salaries (RMB0.4 million),
depreciation of property, plant and equipment (RMB0.9 million) and audit fees (RMB0.5 million).
The increase in amortisation of intangible assets and depreciation of property, plant and equipment
was due to the recognition of intangible assets from the transfer of leased farmland arrangement
and completion of certain construction in progress and purchase of new production equipment
respectively.
Finance costs
The increase in finance costs of RMB25,000 or 12.2% was mainly due to higher interest rate in
3Q2016.
Other operating expenses
No other operating expenses were incurred in 3Q2016 as compared to RMB3,000 in 3Q2015
incurred for inventories written off.
Income tax expense
Income tax expense comprised income tax expense and deferred income tax of RMB5.2 million and
RMB0.1million respectively. The decrease in income tax expense of approximately RMB3.3 million
or 38.2% was due to lower profit from operation.
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Consolidated Statement of Financial Position
The comparative performance for both the assets and liabilities are based on the Group’s
financial statements as at 31 December 2015 and 31 March 2015.
Non-current assets
The increase in property, plant and equipment of RMB12.1 million mainly arose from the
construction work-in-progress for the new factory and office building in Liancheng County, People’s
Republic of China (“PRC”), which was partially offset by the depreciation of property, plant and
equipment and property, plant and equipment written off.
Intangible assets increased by RMB9.8 million. This was mainly due to the recognition of intangible
assets as a result of the agreed purchase discount given by a supplier to the Company’s subsidiary
arising from the contract term in the transfer of leased farmland. This increase was partially offset
by the amortisation of these intangible assets.
Other receivables (non-current) of RMB18.4 million relate to the non-current receivables arising
from the transfer of leased farmland.
The decrease in other assets (non-current) of RMB36.5 million was mainly due to the transfer of
leased farmland.
Current assets
Inventories increased by RMB3.3 million were mainly due to higher level of finished goods in view
of more sales orders received from customers and due to bulk purchase of raw materials.
Trade and other receivables increased by RMB8.2 million due to an increase in other receivables of
RMB10.9 million mainly arising from the current receivables from transfer of leased farmland of
RMB5.9 million and advance payment for purchase of production equipment amounting to RMB4.1
million. It was partially offset by a decrease in trade receivables of RMB2.6 million as a result of
payments from customers.
Non-current liability
Deferred tax liability relates to withholding tax on current period distributable earnings of one of
our PRC subsidiaries. Distributable earnings declared by the PRC subsidiary as dividends to its
foreign investor is subject to withholding tax in the PRC.
Current liabilities
Income tax payable decreased by RMB5.5 million was mainly due to lower profit from operation in
3Q2016 as compared to higher profit in peak season from 1 January 2015 to 31 March 2015,
resulting in lower income tax payable as at 31 December 2015.
17
Trade and other payables increased by RMB1.1 million was mainly due to the increase in trade
payables of RMB5.5 million and accrual of operating expenses of RMB10.6 million. The increase in
trade payables and accruals was mainly due to delay settlement of the sweet potatoes purchased
from the leased farmland, and increase in accrual of incentive bonus in December 2015,
respectively. The increase was partially offset by the settlement of an amount due to a director for
acquisition of a subsidiary of RMB15.1 million.
Other financial liabilities decreased by RMB14.3 million. This was mainly due to capitalisation of
loan due to a director.
Other liabilities increased by RMB2.9 million were mainly due to the increase in advances from
customers for sales orders placed by the customers.
Consolidated Statement of Cash Flows
Net cash from operating activities of RMB9.5 million in 3Q2016 as compared to net cash from
operating activities of RMB20.6 million in 3Q2015 was mainly due to lower profit recorded in
3Q2016.
Net cash used in investing activities of RMB0.7 million in 3Q2016 as compared to net cash used in
investing activities of RMB27.7 million in 3Q2015 was mainly due to the higher purchase of
property, plant and equipment (including increase in construction-in-progress) in 3Q2015.
Net cash used in financing activities of RMB0.2 million in 3Q2016 as compared to net cash from
financing activities of RMB11.6 million in 3Q2015 was mainly due to the absence of loan proceeds
from banks and directors in 3Q2016.
9.
Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any
variance between it and the actual results
In the section titled “Prospects, Business Strategies and Future Plans – Strategy and Future Plans”
of the Company’s circular dated on 26 June 2015, it was stated that the new factory constructed by
Fujian Zilaohu on a 13,910 sqm plot of land in Liancheng Industrial Park, Food Processing Area, was
expected to begin production in the second half of 2015.
In order to increase the attractiveness of Liancheng Industrial Park, the local government has since
decided to construct centralised waste water treatment facilities for use by the local occupants.
This is beneficial to the Group as such outlay would then be borne by the local government and the
Group needs not build its own waste water treatment facilities.
The Group has commenced partial production in the new factory, and expects full production to
commence only after completion of the centralised waste water treatment facilities by the local
government.
The delay in commencement of full production in the Fujian Zilaohu’s factory will not have any
material impact on the existing production capacity of the Group as the existing facilities of the
Group are adequate to accommodate its current production requirements.
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10.
A commentary at the date of the announcement of the significant trends and competitive
conditions of the industry in which the group operates and any known factors or events that may
affect the group in the next reporting period and the next 12 months.
The business outlook for the sweet potato snack food industry in China remains robust and the
Group is geared for growth both in our product varieties and production capacity to meet the
growing demand in China for sweet potato snack food. The Group also aims to tap into overseas
export markets.
11.
Dividend
If a decision regarding dividend has been made:(a)
Whether an interim (final) dividend has been declared (recommended); and
No dividend has been declared or recommended for the current financial period reported
on.
(b)(i)
Amount per share (cents)
(Optional) Rate (%)
Not applicable.
(b)(ii)
Previous corresponding period (cents)
(Optional) Rate (%)
Not applicable. No dividend has been declared or recommended for the previous
corresponding period.
(c)
Whether the dividend is before tax, net of tax or tax exempt. If before tax or net of tax,
state the tax rate and the country where the dividend is derived. (If the dividend is not
taxable in the hands of shareholders, this must be stated).
Not applicable.
(d)
The date the dividend is payable.
Not applicable.
(e)
The date on which Registrable Transfers receive by the Company (up to 5.00pm) will be
registered before entitlements to the dividend are determined.
Not applicable.
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12.
If no dividend has been declared/recommended, a statement to that effect
No dividend has been declared or recommended for 3Q2016.
13.
If the group has obtained a general mandate from shareholders for interested person
transactions (“IPT”), the aggregate value of such transactions as required under Rule 920(1)(a)(ii).
If no IPT mandate has been obtained, a statement to that effect.
The Group does not have any existing general mandate from shareholders for IPTs pursuant to Rule
920(1)(a)(ii) of the Listing Manual Section B: Rules of Catalist of the SGX-ST.
For the financial year ending 31 March 2016, the total rental payable to Liancheng Tianhe Food
) amounted to RMB1,272,000. Please refer to the Company’s circular to
Factory (
shareholders dated 26 June 2015 for further details. Save for the rental expense paid to Liancheng
Tianhe Food Factory (
) amounting to RMB318,000 in 3Q2016, there were no other
interested person transactions entered into by the Group in 3Q2016.
连城天合食品厂
连城天合食品厂
14.
Negative Confirmation by the Board Pursuant to Rule 705(5) of the Catalist Listing Manual
The Board of Directors of the Company confirms, to the best of their knowledge, nothing has come
to their attention which may render the unaudited financial results for 3Q2016 to be false or
misleading in any material aspect.
BY ORDER OF THE BOARD
Liang Chengwang
Executive Chairman and Chief Executive Officer
1 February 2016
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